Introducing the Regulatory Advocacy Glossary;

Examples of Acronyms in Action 


You may find the glossary useful if you have questions about the nuts and bolts of setting up a meeting with an agency. Or the difference between an NPRM and ANPRM. Or what all these acronyms even stand for!

As we’ve developed the resources on this site, we’ve received questions about some of the terms we use to describe regulatory advocacy. We’ve created a glossary  to explain what we mean (and we link to it on the Quick Guide to Regulatory Advocacy). 

You may find the glossary useful if you have questions about the nuts and bolts of setting up a meeting with an agency. Or the difference between an NPRM and  ANPRM. Or what all these acronyms even stand for!

This glossary is a living document. As we identify new terms that need clarification, we’ll be working to add them. Please reach out if you think of something you’d like to see added to the glossary or you see something we’ve gotten wrong.

Why Should I Care About SBREFA?

The glossary explains why SBREFA (Small Business Regulatory Enforcement Fairness Act) shows up in the pre-rule stage along with the more familiar RFI (request for information) or ANPRM (advanced notice of proposed rulemaking). The Small Business Regulatory Enforcement Fairness Act (SBREFA) requires the Consumer Financial Protection Bureau (CFPB), the Environmental Protection Agency (EPA), and the Occupational Health and Safety Administration (OSHA) to take certain steps before issuing a rule that is likely to have a significant impact on a substantial number of small businesses.  Those steps include preparing materials about the proposal and reviewing those materials with a panel of small business representatives. After the panel review, a report on the panel’s recommendations is made public. The panel report must be made public, usually in conjunction with the release of the proposal.

These three agencies differ in what they make public when, but all three have mechanisms that allow for some public review of the agencies’ thinking at this pre-rule stage. Engagement at the pre-rule stage is particularly powerful and can help shape the proposal. Advocates can engage during the SBREFA process even if they don’t represent small businesses, whether by reviewing SBREFA panel materials, listening to the SBREFA panel meetings, or asking questions of the agency about the SBREFA process and opportunities for public engagement. The panel report can provide a particularly clear roadmap to likely business opposition to the rule.

An Example:  Do You Care About Financial Inclusion?  Comment by December 14th!

Right now, the Consumer Financial Protection Bureau (CFPB) is preparing for a SBREFA panel later this month  on its implementation of Section 1071 of the Dodd-Frank Act. It has published both the outline of the proposed rule it is providing to the SBREFA panel and a  high-level summary of that outline, along with other materials. Anyone can review them and comment on them. The National Community Reinvestment Coalition (NCRC) has already published an initial summary of the outline, headlined, “ A Step in the Right Direction, But Improvements Needed.

This rulemaking has particular significance for our historical moment. Small business development can buffer Black and Brown communities against discrimination and serve to build wealth in the face of centuries of financial exclusion, but only if credit is available on non-discriminatory terms. Entrepreneurs of color are often discouraged from even applying for a loan. One study on the Paycheck Protection Program, using matched-pair testers, found that none of the tested banks encouraged any of the Black female testers to apply for a Paycheck Protection Program loan.\

Section 1071 of the Dodd-Frank Act: Making Visible Racial and Gender Discrimination in Small Business Lending

Section 1071 of the Dodd-Frank Act was meant to make visible the discrimination against small business owners based on gender or race. Section 1071 requires financial institutions to collect data on application for credit from women-owned, minority-owned, and small businesses. It also requires annual reporting to the CFPB. This data would let us see where and how discrimination is occurring. Data would help us fashion a remedy and hold discriminatory actors to account.   

The outline contains proposals the CFPB is considering to implement Section 1071, many of which could significantly impact its efficacy in protecting business owners from racial or gender discrimination. For instance, while the definition of a covered lender under 1071 is relatively broad and inclusive, the CFPB is considering exempting financial institutions “from any collection and reporting requirements based on either or both a size-based and/or activity-based threshold.” Should we be concerned about predatory behaviors by smaller lenders? What evidence do you have either way to raise to the CFPB?  

The comments submitted on the outline, as well as comments from the small business representatives at the panel, will form part of the rulemaking record.  They will influence what rule the CFPB proposes.

Conclusion

We hope this detour has helped make clear some of the power regulatory advocacy has for racial and economic justice.  The glossary is just one of our tools to help with making your regulatory advocacy easier and more effective.  Please check out all our regulatory advocacy tools and let us know what you think.

 

– Sarah and Diane

 

CFPB’s “Advisory Opinion Program” Proposal Offers Corporations Protection From Consumers


CFPB is accepting comments on this proposal through Friday, Aug. 21.

In mid-June, while the rest of the country was confronting racial injustice, the Consumer Financial Protection Bureau (CFPB) released a notice  offering corporations streamlined, private access to safe harbor interpretations of the laws under its jurisdiction.  Under the CFPB’s proposed “Advisory Opinion Program,” corporations, operating in the gray zone of the law, can, on the basis of a confidential, potentially anonymous submission, ask for the CFPB’s blessing of their business practices.  There is no opportunity for consumers or their advocates to present a dissenting view.  The CFPB has made clear that these advisory opinions will, at least sometimes, offer a safe harbor for legally suspect acts, shielding corporations from liability and depriving harmed consumers of legal recourse. 

The CFPB stated that, because the advisory opinion program is a rule about internal agency procedures, it did not need to take comments on the program.  Nonetheless, it is accepting comments  through the end of the day on Friday, August 21.  The questions it asks point towards a fixed decision to aid corporations at the public’s expense:  How can the CFPB better “accommodate” those who want the safe harbor but don’t want to pay top dollar for a lawyer to prepare the request? How should the CFPB handle “sensitive” information and, presumably, shield it from public view?  

Peeking Behind the Curtain of Internal Agency Procedures

Still, understanding how the CFPB proposes to run its advisory opinion program, like other aspects of internal agency procedure, is an important part of effective regulatory advocacy.  What opportunities does the advisory opinion program hold for advocates, if any?  What internal processes could advocates leverage to promote the interests of consumers and marginalized communities?  What does this peek behind the curtain of “internal agency procedures” tell us about how the CFPB thinks about its work?

 

First and foremost, perhaps, is that this is an agency attuned to business interests.  Businesses, although vociferous in their opposition to guidance  when used to make clear enforceable obligations under the law, have long sought the ability to get public, written guidance from the CFPB that they could rely on in legal proceedings brought by consumers or regulators.  The CFPB itself expects that requestors will be primarily businesses or other for-profit entities.” The promised anonymity, if a requestor goes through a third-party, like a law firm or trade association, and confidentiality of information submitted both speak to business interests, not consumer concerns or the public interest.

The CFPB’s proposed process for its advisory opinion program is strikingly lop-sided.  The Administrative Conference of the United States  suggested the CFPB might find of ACUS Recommendation 2019-1, Agency Guidance Through Interpretive Rules “particularly useful.”  That recommendation highlights the importance of “afford[ing] members of the public a fair opportunity to argue for… analyses other than those set forth in an interpretive rule.”  ACUS urges that, at the least, there be a post hoc opportunity for public engagement.  The closest the CFPB comes to asking for comment on this point is how to make the advisory opinions “available to the public in a useful format.”

Consumers and Industry All Lose in the Long Run

Throughout the Dodd-Frank Act, the CFPB is charged with listening, not just to consumers, but to “traditionally underserved communities.”  The Office of Research, market monitoring, the Office of Community Affairs are all explicitly mandated to gather information on and from traditionally underserved communities, in order to inform the CFPB’s rulemaking and policy agenda.  The CFPB’s advisory opinion proposal not only ignores the administrative law best practices suggested by the ACUS but turns its back on those traditionally underserved communities the Dodd-Frank Act centered.

This proposal also runs the risk of not working well, even for the industry stakeholders it intends to benefit.  The Federal Reserve Board tried a similar ad hoc regulatory approach in the early years of the Truth-in-Lending Act and abandoned it in 1980, judging it an abject failure.  The sheer volume of the more than 1500 interpretations and letters issued over a 12-year period complicated compliance.  The Senate Report on the TILA Simplification bill (S. Rep. No. 368, 96th Cong., 2d Sess.) cited those advisory opinions as a key reason “simplification” of the pre-eminent consumer protection statute was needed, noting, “Creditors . . . have encountered increasing difficulty in keeping current with a steady stream of administrative interpretations . . . .”  The CFPB doesn’t mention this history in its proposal, so we don’t know how or if the CFPB plans to distinguish its approach from the failed approach of the Federal Reserve Board.

CRREA Project’s Take

An advisory opinion program isn’t necessarily wrong.  Providing clarity on regulations is helpful, and not every issue warrants full notice-and-comment treatment.  But a program cloaked in secrecy, affording confidentiality and anonymity to big business without assuring any input from consumers falls short.  The CFPB should scrap its advisory opinion program until it can develop a proposal that explains how consumer interests will be protected and how the public will receive the benefit of open and transparent processes.